BRIEF EXERCISE 8-2 Computing and Using the CM Ratio [LO1-CC2,3] Last year , when Beaty Inc. sold 40,000 units , total sales were $ 200,000 , variable expenses were 70 % of sales revenue , and total fixed expenses were $ 50,000 . Required : 1. What is the company's CM per unit ? 2. Estimate the change in the company's net income if it were to increase its sales by 1,500 units .

BRIEF EXERCISE 8-3 Proposing Changes in Variable Costs , Fixed Costs , Selling Price , and Volume [LO2-CC5 Data for Whiteworth Ltd. are shown below : Per Unit Percentage of Sales 100 $ 80 Sales price 50 62.5 Less : Variable expenses 37.5 $ 30 Contribution margin Fixed expenses are $ 25,000 per month , and the company is selling 2,000 units per month . Required : 1. The marketing manager argues that a $ 4,000 increase in the monthly advertising budget would increase monthly sales by $ 8,000 . Should the advertising budget be increased ? 2. Refer to the original data . Management is considering using higher - quality components that would increase the variable cost by $ 2.00 per unit . The marketing manager believes the higher - quality product would increase sales by 10 % per month . Should the higher - quality components be used ?

BRIEF EXERCISE 8-4 Computing the Break - Even Point [LO2-CC6] Manos Products has a single product , a garden chair whose selling price is $ 60 and variable cost is $ 50 per unit . The company's monthly fixed expenses are $ 25,000 . Required : 1. Compute the company's break - even point in unit sales using the equation method . 2. Compute the company's break - even point in sales dollars using the equation method and the CM ratio . 3. Compute the company's break - even point in unit sales using the contribution margin method . 4. Compute the company's break - even point in sales dollars using the contribution margin method and the CM ratio .

BRIEF EXERCISE 8-5 Preparing a CVP Graph [LO1-CC4] Karlik Enterprises has a single product , whose selling price is $ 24 and variable cost is $ 18 per unit . The company's monthly fixed expenses are $ 24,000 . Required : 1. Prepare a CVP graph for the company up to a sales level of 8,000 units . 2. Estimate the company's break - even point in unit sales using your CVP graph .

BRIEF EXERCISE 8-6 Computing Level of Sales for Target Before - Tax Profit [LO2-CC7] Lexi Inc. has a single product , whose selling price is $ 250 and whose variable cost is 72 % of sales price . The company's monthly fixed expenses are $ 60,000 . Required : 1. Using the equation method , compute the unit sales that are required to earn a target before - tax profit of $ 20,000 . 2. Using the contribution margin approach , compute the dollar sales that are required to earn a target before - tax profit of $ 25,000 .

BRIEF EXERCISE 8-6 Computing Level of Sales for Target Before-Tax Profit [LO2 - CC7] Lexi Inc.has a single product, whose selling price is $250 and whose variable cost is 72% of sales price. The company's monthly fixed expenses are $60,000. Required: 1. Using the equation method, compute the unit sales that are required to earn a target before-tax profit of $20,000. 2. Using the contribution margin approach, compute the dollar sales that are required to earn a target before-tax profit of $25,000